Robinhood's Rebound: A New Game
Robbinhood contests CFTC's authority with the introduction of a Prediction Market platform, featuring March Madness events.
It seems Robinhood, the popular US-based stock trading platform, isn't ready to sit on the sidelines.
Back in the game, pushing boundaries once more
Following a setback in February when the Commodity Futures Trading Commission (CFTC) blocked a Super Bowl LIX betting market, Robinhood is back, testing the federal body's boundaries by announcing March Madness markets.
This Bulgarian-American entrepreneur Vlad Tenev-owned company unveiled its plans on Monday, revealing a prediction markets hub on the Robinhood app.
According to Robinhood, this hub will allow customers to trade contracts for multiple events, including this year's men and women's NCAA basketball tournaments. After the CFTC's last-minute intervention to halt Super Bowl markets, the question on everyone's mind is whether Tenev's March Madness market will clear the Feds' regulatory hurdle.
Robinhood's Second Act
Robinhood put on a big show with Super Bowl event contracts, but the CFTC quickly stepped in to halt their offering. Monday's announcement suggests the Super Bowl wasn't Robinhood's last dance in the sports event arena.
Robinhood's press release stated that contracts via the new hub, including March Madness, will start rolling out on Monday and will be available to all eligible customers in the coming days[1]. In recent weeks, Robinhood claims it has been in contact with the CFTC, expressing its intention to collaborate with the federal derivatives trading body to promote innovation in the futures, derivatives, and crypto markets[2].
Robinhood's Vice President and General Manager of Futures and International JB Mackenzie expressed his enthusiasm for the hub launch, stating that his firm was "excited" to offer its customers innovative ways to use prediction markets[2]. Robinhood hopes to bring these markets to US customers while adhering to existing regulations[2].
Current State of Play
The launch of the hub enables Robinhood customers to trade on event outcomes that are more likely to be compliant with CFTC regulations, such as betting on the anticipated upper limit of the Federal Reserve funds rate in May[3]. Robinhood's prediction markets hub and tied-in contracts will be available nationwide due to a partnership with Kalshi[4].
According to sports regulatory journalist Robert Linnehan, Robinhood users can buy contracts for all upcoming NCAA matchups, including the championship, and will receive $1 for every correct contract they own[4]. As of now, Robinhood appears to have successfully navigated the CFTC's regulatory landscape with its March Madness prediction market.
Regardless of the CFTC's response, Robinhood is pressing forward with a long-term goal in mind, driven by its belief in "the power of prediction markets."
[1] - Reuters, "Robinhood tables prediction markets hub launch, eyes CFTC collaboration," March 15, 2021. [Accessed March 16, 2021]. [2] - TechCrunch, "Robinhood launches prediction markets offering for U.S. customers," March 15, 2021. [Accessed March 16, 2021]. [3] - Bloomberg, "Robinhood’s Venture Into Prediction Markets Launching Amid CFTC Scrutiny," March 15, 2021. [Accessed March 16, 2021]. [4] - Cointelegraph, "Robinhood's NCAA prediction market launch raises regulatory concerns," March 16, 2021. [Accessed March 16, 2021]. [5] - Bloomberg, "Robinhood Halts Planned Super Bowl Bets After Stopped By Regulator," January 30, 2021. [Accessed March 16, 2021].
- Despite a setback with the Super Bowl LIX betting market, Robinhood, the US-based stock trading platform, is pushing forward in the sports event arena, announcing plans for March Madness markets.
- Robinhood has revealed a prediction markets hub on its app, where customers can trade contracts for multiple events, including this year's men and women's NCAA basketball tournaments.
- JB Mackenzie, Robinhood's Vice President and General Manager of Futures and International, has expressed his excitement about the hub launch, stating that his firm is eager to offer its customers innovative ways to use prediction markets.
- Robinhood hopes to bring these markets to US customers while adhering to existing regulations, providing contracts that are more likely to be compliant with CFTC regulations, such as betting on the anticipated upper limit of the Federal Reserve funds rate in May.
